Work has begun on the controversial Oxford on Crown building site, with the demolition of the iconic Wollongong live music venue the Oxford Tavern beginning last week.

Plans for the $38 million dollar development were revealed in September in 2013, prompting some nearby residents to voice their concerns about increased traffic, extra garbage, a loss of sunlight and views, and affected property values due to construction noise.

Once completed, Oxford on Crown will consist of two 14-storey residential and commercial towers, and will stand on the site formerly occupied by the much-loved music venue, which shut in 2010.

A draft artist's impression of a corner coffee shop proposed for the Oxford On Crown building. Picture: PSR Crown Investment.

Speaking to the Mercury in March, PSR Crown Investment developer Robert Haung said the project would likely be completed by early 2016.

Planner and spokesman for the developers, Brett Daintry, said the approval marked a new beginning for the CBD site.

‘‘This is the most significant development in this corner of the CBD in Wollongong for a long time,’’ he said.

‘‘It will set the standard and desired character of future high-density residential developments that will activate the city.’’